The Truth About the TREND. Market Flow Analysis Method ( MFAM )

Transcription

1 The Truth About the TREND Market Flow Analysis Method

2 The Core Price Structure and Rhythm of ALL Markets! To Successfully Trade the Markets You need to understand the Underlying Movements and Rhythm of the Markets! The following Principles form the Cornerstone of a Consistent and Successful Trading Methodology. There is only one major Market Cycle (or movement) in existence. The Market can do nothing else but comply with this one basic Market Cycle, we call it The Market Flow Analysis Method (Pure PRICE ACTION) There is no other Movement or Motion possible in the Markets. The Markets do NOT move in a Random fashion. Market Flow Analysis Method The Markets ALWAYS move within the framework of an Underlying Market Wave. Otherwise, known as a TREND, whether it be Up, Down, or Sideways.

3 Market Flow Analysis Method Three Primary Waves (TRENDS) in the Markets! There are only Three (3) Primary Waves (TRENDS) in the Markets: 1) UP Trend A Series of Higher Highs and Higher Lows 2) DOWN Trend A Series of Lower Highs and Lower Lows 3) SIDEWAYS Trend A Series of relatively Equal Highs and Equal Lows Identifying which Wave or TREND the Market is in is vital to Successful Trading. The Market Flow Analysis Method (MFAM) is based upon: the Upside Penetration of market HIGHS, and the Downside Penetration of market LOWS. New Highs and New Lows are continuously being formed in the Markets. Therefore, Traders must identify these important levels to help in mapping out what the Markets are most likely going to do next. This will help you in identifying if a market is TRENDING UP, TRENDING DOWN, or TRENDING SIDEWAYS, at the Early Stages of the Trend and not after the fact.

4 Market Flow Analysis Method Starting the Market Flow Analysis Method Process In Trading the E-Mini S&P 500 Market, once the Market moves in either direction off of the Open and establishes a High and Low with a sufficient range between them, then an Initial Swing has been established. Once the Market makes a move off of either the High or Low and proceeds to Penetrate Up through the High or Down through Low of the Initial Swing, a new TREND (potentially) begins in the direction of the penetration. The Penetration UP through the HIGH of the INITIAL SWING indicates the beginning of a new Up Trend HIGH HIGH LOW LOW The Penetration DOWN through the LOW of the INITIAL SWING indicates the beginning of a new Down Trend

5

6 Market Flow Analysis Method The UP Trend Market Flow Process A series of New Highs (NHs) and Active Lows (ALs) NH NH NH HIGH PL AL MRAL PL (Most Recent Active Low) PL AL LOW LL (Lowest LOW) PL AL (Active Low)

7

8 Market Flow Analysis Method The DOWN Trend Market Flow Process A series of New Lows (NLs) and Active Highs (AHs) HIGH AH PH AH PH LOW AH PH (Most Recent Active High) MRAH PH NL NL NL

9

10 The SIDEWAYS Market Market Flow Analysis Method A series of relatively Equal Highs and Equal Lows HIGH LOW

11

12 Market Flow Analysis Method An UP Trend Reversing Into A DOWN Trend Downside Penetration of the Most Recent Active Low (MRAL) in the MFAM NH HH NH AH PH NH PL AL PL MRAL (Most Recent Active Low) NL AL The UP Trend is potentially Reversing into a DOWN Trend at the Downside Penetration of the MRAL Simply being able to identify critical Lows in an UPTREND will enable you to stay in a Trend longer and you will know with High Probability at what levels the Market is most likely going to change directions.

13

14 Market Flow Analysis Method A DOWN Trend Reversing Into An UP Trend Upside Penetration of the Most Recent Active High (MRAH) in the MFAM AH The DOWN Trend is potentially Reversing into an UP Trend at the Upside Penetration of the MRAH AH PH (Most Recent Active High) MRAH PH NH NL NL NL LL AL PL Simply being able to identify critical Highs in a DOWNTREND will enable you to stay in a Trend longer and you will know with High Probability at what levels the Market is most likely going to change directions.

15

16

17